Gov. LePage and Hayes dig in on dispute over bonds

Both sides in a dispute that threatens dozens of state transportation projects doubled down on their disagreement Tuesday.

Gov. Paul LePage and State Treasurer Terry Hayes are at odds over the bidding process to hire an agent to shepherd the upcoming sale of state bonds. Until they resolve the dispute, the state can’t sell up to $110 million in voter-approved bonds. The delay could threaten another $500 million in federal and matching funds, jeopardizing dozens of transportation projects worth roughly $600 million.

Gov. Paul LePage: "The way they wrote the (request for proposals), you had to be a big law firm from out of state in order to qualify." Associated Press/Robert F. Bukaty

State Treasurer Terry Hayes says, "Every day of hesitation and delay causes uncertainty and stress for thousands of Mainers" as construction projects are held up without funding. Joe Phelan/Kennebec Journal

LePage came out swinging Tuesday morning in an interview on the “George Hale Rick Tyler Show” on WVOM-FM in Bangor.

“I will say this, I am not going to say it was underhanded yet, but it certainly shows an inexperience,” LePage said. “The way it worked, the way they wrote the RFP (request for proposals), you had to be a big law firm from out of state in order to qualify.”

“They were specifically aiming it at one law firm, which was the existing firm that has the contract now,” he added.

Not so, said Hayes, who noted in a statement later in the day that the RFP process to hire a bond agent has been unchanged since 2004, and that LePage’s claims “are not accurate” and there is no need for a “do-over.” She said she does not intend to reissue the request for proposals because it would delay an already-short construction season.

“Every day of hesitation and delay causes uncertainty and stress for thousands of Mainers, both of which are avoidable,” Hayes said.

At the center of the dispute is the process used to hire Locke Lord LLP, a Texas law firm, as the state’s bond agent. While the Office of the State Treasurer prepares bonds to finance state projects, a bond agent is hired to bring them to market, work that is considered highly specialized. The amount of the bonds to be sold is determined by the governor.

Lepage said the request for proposals to hire a bond agent submitted by Hayes unfairly excluded Maine law firms that would have otherwise bid on the job. He is demanding she rewrite the RFP to invite more competition from Maine firms. Only one other law firm, Portland’s Preti Flaherty, submitted a bid to become bond agent.

The RFP stated that the contract award was subject to review from the State Procurement Committee, a group re-established by a LePage executive order in March 2016 to oversee major state agency purchases that fall under the jurisdiction of the executive branch. The five-member committee is made up of the governor’s chief legal counsel and division heads from the Department of Administrative and Financial Services.

The committee rejected the Office of the State Treasurer’s award to Locke Lord LLP, arguing that the RFP was not open enough to Maine firms, and said Hayes should amend it and resubmit it to allow more competition from Maine companies. The governor’s office said it was contacted by multiple Maine law firms complaining about the RFP process.

In his interview Tuesday, LePage said Hayes was upset because she didn’t get the outcome she wanted.

“She doesn’t have to use the procurement people, because she’s a constitutional officer. … She can do her own thing like the attorney general does,” LePage said. “If she uses it, she has to follow the rules that we use.”

LePage said other state agencies, including the Office of the Attorney General and the judiciary, write RFPs “to suit the people they want to win.”

“When you narrow it so much that Maine people can’t qualify, that’s bad business,” he said.

In an interview Tuesday, Hayes admitted it was a mistake to include language in the RFP that exposed the contract to review from the committee. The RFP contained “boilerplate” language from the state’s purchasing division, and she accidentally did not omit reference to the review committee when it was submitted.

“It is my oversight. I am not blaming anyone but me,” but the committee does not have oversight over the Office of the State Treasurer, Hayes said.

The RFPs for bond counsel in 2004, 2007, 2011 and 2017 all included a section asking firms to list references from other state treasurers and government agencies where they served as bond counsel.

LePage objects to that requirement, but Hayes said it is necessary to make sure the Office of the State Treasurer hires an experienced firm. The contract is worth about $80,000, based on the last two years, Hayes said.

The Department of Transportation has stopped awarding contracts until the flap is resolved, and construction companies fear a continued freeze could delay an already compressed summer construction season. Pressure from Maine contractors has been mounting.

Hayes, an independent who is running for governor next year, said until LePage tells her how much to bond, she cannot move forward to sell the bonds in early June as expected.

“I’ve given everything I can. The governor has decided this is going to be a crisis,” Hayes said. “I am powerless to change this trajectory, the governor holds all the cards.”

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